"New Orleans airport avoids breaking piggy bank"

Thursday, June 19, 2003

Airport avoids breaking piggy bank 
Borrowing plan is put in mothballs
By Matt Scallan 
The New Orleans (LA) Times Picayune


The nation's airline industry is still in turmoil, but Louis Armstrong
International Airport won't have to borrow from construction funds in
order to keep the landing lights on, as airport officials feared in the
months after the Sept. 11, 2001, terrorist attacks. 

The New Orleans Aviation Board was prepared to borrow as much as $8
million in construction funds to lower costs for the airlines in 2001
and 2002, but that money was not tapped. 
     
The airlines are responsible for paying the difference between what it
costs to run the airport and what the airport makes from "non-airline"
revenues, such as parking and food sales. 

Many feared that airlines might need temporary relief from those airport
expenses after the attacks. A plan, approved by the Federal Aviation
Administration, allowed airports to subsidize their operations with
construction money, which the airlines would have to repay by the end of
2004. 

After paying their usual charges during the year, the airlines owed
Armstrong International an additional $1.8 million at the end of 2001.
But they chose to pay the money at the time rather than take advantage
of the loans. 

For 2002, the airlines owed an additional $400,000. However, Aviation
Director Roy Williams told board members Wednesday that the airport
would absorb that cost rather than charge the airlines or borrow from
the construction fund. 

Not that it's less expensive to run an airport these days. 

It cost $42.5 million to run the airport in 2002, up from $38.6 million
in 2001. 

Higher security helped drive up the cost, as did $5 million in
construction work to accommodate bomb-sniffing devices and more security
checkpoints that were mandated in the wake of the attacks. 

The airport had budgeted $45.4 million to run the airport in 2002, and
it raised landing fees and terminal rental rates with that in mind. The
airport adjusts its rates and charges annually. 

One big savings was in salaries. Raises approved by the New Orleans City
Council were in effect for only the last seven months of 2002, and some
openings were not filled during the year. In all, the airport spent $1.6
million less in salaries than it budgeted. 

However, while costs were going up, non-airline revenue dropped from
$25.9 million in 2001 to $24.1 million in 2002. The biggest hit came
from the airport's parking operation, which netted $5.1 million last
year, down from $6.3 million in 2001. In 2000, the last full year before
the terrorist attacks, the airport netted more than $7 million from
parking fees. 

Not only were security costs higher, but an addition to the airport's
parking garage drove many people to off-airport lots. 

Though airport traffic has dropped about 3 percent from 2001, other
airports have suffered even steeper declines. 

Costs are still higher at Armstrong International than at comparable
airports. The airport's cost per enplaned passenger was $9.26 in 2002,
compared with the industry average of about $7. But airport officials
expect that figure to decline to $8.74 in 2003. 


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